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Booming with the Boba Guys: From 2011 Pop-up to 2016 Growing Empire

Boba Guys founder Andrew Chau at the Hayes Valley store in San Francisco.

By Janis Hashe

Boba guy Andrew Chau bends over a small, counter-size nitrogen charging station, preparing samples of nitro tea for a visitor to sample in the new, flagship Hayes Valley, San Francisco store. It’s a new addition for the wildly successful Boba Guys, which began as a San Francisco pop-up store in 2011 with a private investment of less than $250,000. Since then, Chau and partner Bin Chen have built a business now worth “tens of millions of dollars.”

While the retail focus of the business continues to be boba tea, Chau says he became interested in nitro coffee about three years ago, and it seemed like an intriguing way to “innovate tea.” The pair collaborated with local Black Sands Brewery to experiment with nitro tea and discovered that the process creates a cascading beverage that brings out a tea flavor that is silkier and sweeter without added dairy or sugar.

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Boba Boom

Chau and Chen initially bonded while working at messenger-bag maker Timbuk2. At their store, a card soliciting new retail workers reads, “We started as just two guys with a rice cooker, serving out of a bar at a ramen restaurant.” Their mantra, “quality, passion and transparency,” led them to brew tea from tea leaves (no powders are used), use only organic milk from local Straus Family Creamery, and create their own housemade syrups. This meant their boba teas were up to 30 percent more expensive than what was being offered at the time. Customers, however, lined up, and in 2013, the Boba Guys opened its first permanent store at 3491 19th Street in San Francisco. Today, it operates four stores in the San Francisco area and two in New York—with a nitro tea-focused location scheduled for a 2017 opening.

Customers choose from “classic milk teas,” such as jasmine or iced matcha latte, and “premium milk teas,” such as muscat oolong, coconut green tea, and Golden Honey Black. All are offered in 16- and 24-oz servings, either iced or hot, and range in price from $3.50 to $5.50. Toppings, including tapioca balls, almond jelly, and grass jelly, are an additional 50¢ each.

The loose tea arm of the business is branded under the name Tea People, and to promote in-store sales, “tea flights” of three teas paired with chocolate are offered at $10 each, including Shock & Awe, Dark Roasts, and China Top 3.

“There is a very small profit margin for these flights,” says Chau, “but it’s a great way to introduce people to other teas.” He thinks of this education as similar to what sommeliers do with wine and baristas with coffee—and that it’s part of the wave of the future.

Tea remains responsible for between 70 and 80 percent of Boba Guys’ profits (including the online tea store), with food items such as the popular Hong Kong Toast, made with housemade buttercream on toast, and the recently introduced onigiri (savory rice balls) accounting for about 10 percent. The stores also sell Boba Guys merchandise, featuring its distinctive aardvark-drinking-boba logo.

Maintaining the Mission

Asked how the two partners maintain their commitment to “quality, passion and transparency” when Boba Guys is constantly expanding, Chau says, “We stay vertically integrated. I go to Asia to source our teas. The public helps to keep us accountable and we keep our values by having a soul.”

He adds: “We look up to companies like Patagonia that have remained true to their original missions. We interview almost everyone who wants to work here [they now have 100 employees] and we often work shifts in the stores.

“We wanted to found a company that lasts 100 years,” he summarizes. “And we believe we make tea more entertaining and fun.”